Question 1

Wombart Manufacturing sells a machine on credit to Cryslie Printing Co.Wombart insists on a security interest in the machine to:

Accepted Answer

A)  give itself a legal interest in the machine. 
B)  give itself a legal interest in all of Cryslie's property. 
C)  establish a priority claim in the machine ahead of other creditors of Cryslie. 
D)  Both a and c 
A)  give itself a legal interest in the machine. 
B)  give itself a legal interest in all of Cryslie's property. 
C)  establish a priority claim in the machine ahead of other creditors of Cryslie. 
D)  Both a and c

Question 2

Maddie enters into a secured consumer debt transaction with Friendly Bank.When Maddie pays the loan in full,Friendly Bank is required to file a statement indicating that it no longer claims a secured interest in the collateral.This statement must be filed within one month from the date the debt is fully paid.

Accepted Answer

A) True 
 B)False

Question 3

Wedney,Inc.has a purchase money security interest in one of Yoro Chicken's meat processing machines.Wedney filed a financing statement on the day the machine was delivered,perfecting its interest.Great State Bank already had a security interest in the machine.Which party has superior priority rights in the meat processing machine?

Accepted Answer

A)  Wedney. A PMSI in collateral other than inventory takes priority over a conflicting security interest if the PMSI is perfected at the time the debtor receives the collateral or within 20 days after he receives it. 
B)  Great State Bank, since it had an earlier security interest. 
C)  The party who is first to repossess the collateral. 
D)  The creditors have equal priority. 
A)  Wedney. A PMSI in collateral other than inventory takes priority over a conflicting security interest if the PMSI is perfected at the time the debtor receives the collateral or within 20 days after he receives it. 
B)  Great State Bank, since it had an earlier security interest. 
C)  The party who is first to repossess the collateral. 
D)  The creditors have equal priority.

Question 4

Great State Bank loans money to Seth,securing the loan with property owned by Seth.Great State Bank is advised by its attorney to file a financing statement.Great State Bank doesn't understand why it should spend the extra money for this filing,since Seth has told them that he has no other creditors.Why should Great State Bank file a financing statement?

Accepted Answer

A)  There are criminal penalties for failing to file. 
B)  The financing statement allows Great State Bank to repossess the collateral on default without a court order. 
C)  The financing statement will protect Great State's priority rights with other creditors by giving notice to other creditors that it claims a security interest in the collateral. 
D)  Filing the financing statement is necessary to complete the attachment requirement in order to create a security interest. 
A)  There are criminal penalties for failing to file. 
B)  The financing statement allows Great State Bank to repossess the collateral on default without a court order. 
C)  The financing statement will protect Great State's priority rights with other creditors by giving notice to other creditors that it claims a security interest in the collateral. 
D)  Filing the financing statement is necessary to complete the attachment requirement in order to create a security interest.

Question 5

Spicy & Hot,Inc.is interested in expanding its Mexican food restaurant into a Mexican food catering business.Spicy & Hot,Inc.buys a new delivery van from Van World.Spicy & Hot,Inc.is a buyer in the ordinary course of business when purchasing the van.

Accepted Answer

A) True 
 B)False

Question 6

Aubry purchased a washing machine,a freezer,and a refrigerator from Gateway Appliances on credit,giving Gateway a security interest in the appliances.The appliances were for Aubry's household use.Gateway did not file a financing statement.Six months later,Aubry had a garage sale and sold the appliances to Tam.Tam bought the appliances for her student rental property.Aubry left town owing money on the appliances.If Gateway can trace the appliances to Tam,can Gateway repossess the appliances? Explain in detail.

Accepted Answer

Yes.Generally with consumer goods,a buye

Exam 24: Secured Transactions

Wombart Manufacturing sells a machine on credit to Cryslie Printing Co.Wombart insists on a security interest in the machine to:

Spicy & Hot,Inc.is interested in expanding its Mexican food restaurant into a Mexican food catering business.Spicy & Hot,Inc.buys a new delivery van from Van World.Spicy & Hot,Inc.is a buyer in the ordinary course of business when purchasing the van.

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